Suppose That at the Fixed Exchange Rate Implied by the Gold

question 3

Multiple Choice

Suppose that at the fixed exchange rate implied by the gold standard, the quantity supplied of Podgland's currency exceeded the quantity demanded. This implies that

• A) Podgland has a surplus in its balance of payments.
• B) Podgland has a deficit in its balance of payments.
• C) Podgland has a surplus in its capital account.
• D) The exchange rate will fall to restore equilibrium.

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Definitions:

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A legal entity that is separate from its owners, providing limited liability to its shareholders and capable of owning property, entering contracts, and being sued.

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Holders of preferred shares who may have a right to vote arising if dividends are not paid.

Dividends

Payments made by a corporation to its shareholders from profits, usually on a regular basis.

Vote

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